We spend most of our time indoors; however, little is known about the effects of exposure to aerosol particles indoors. We aimed to determine differences in relative toxicity and physicochemical properties of PM2.5 collected simultaneously indoors (PM2.5 INDOOR) and outdoors (PM2.5 OUTDOOR) in 15 occupied homes in southern Sweden. Collected particles were extracted from filters, pooled (indoor and outdoor separately), and characterized for chemical composition and endotoxins before being tested for toxicity in mice via intratracheal instillation. Various endpoints including lung inflammation, genotoxicity, and acute-phase response in lung and liver were assessed 1, 3, and 28 days post-exposure. Chemical composition of particles used in toxicological assessment was compared to particles analyzed without extraction. Time-resolved particle mass and number concentrations were monitored. PM2.5 INDOOR showed higher relative concentrations (μg mg−1) of metals, PAHs, and endotoxins compared to PM2.5 OUTDOOR. These differences may be linked to PM2.5 INDOOR causing significantly higher lung inflammation and lung acute-phase response 1 day post-exposure compared to PM2.5 OUTDOOR and vehicle controls, respectively. None of the tested materials caused genotoxicity. PM2.5 INDOOR displayed higher relative toxicity than PM2.5 OUTDOOR under the studied conditions, that is, wintertime with reduced air exchange rates, high influence of indoor sources, and relatively low outdoor concentrations of PM. Reducing PM2.5 INDOOR exposure requires reduction of both infiltration from outdoors and indoor-generated particles. © 2022 The Authors.